Can an organization have Basic Salary as the only component of the salary structure? Is there any law that directs organizations to have other components?

I am trying to have mediocre job employees of organization pay only the minimum wage in basic and no other components.

From India, Ahmedabad
Labour Law & Hr Consultant
Freelancer In Hr &indirect Taxes For


Dear friend,

First, When you pay salary/wages to an employee simply without any components, it is called consolidated wages and the entire sum would be taken into account for the purpose of calculation of indirect benefits like statutory bonus, contributions to EPF and ESI, gratuity if such benefits are applicable, lay-off or retrenchment compensation etc.

Secondly, under the Minimum Wages Act,1948, it has been the practice of appropriate Governments to fix the basic wages with reference to the skill-level required for the job and to add the component of variable dearness allowance linked to some cost of living index. To my knowledge no other components by way of allowances are prescribed or added under the Act except the value of other amenities required by the very nature of the job like free food etc.

If I remember correct, some States like Maharashtra and Gujarat have separate laws prescribing compulsory payment of house rent allowance which should also be treated as the part of the statutory minimum wages.

From India, Salem
Re: key5 I want to know more opinions on this topic so I comment here!
From Vietnam, Haiphong
indu 182

Dear Member taking into consideration only basic wages is lawful. We add other component in basic wages entirely depend on employer. If employer wish to give extra benefits to employee .
From India, New Delhi

Minimum wages are declared by the competent authorities through gazzette notifications.
Apart from this Spl Allowances or dearness allowances and HRA also form the part of salary.
Apartfrom this other statutory componenets need to be included in the salary structure,
Like, Bonus, Leave with wages, National holiday, and gratuity as entitlement subject to eligibility and entitlement.
The statutory benefits like epf, esic,LWF etc are also part of salary and mandatory to be inculded in salary.

From India, Vadodara

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